Issue IPO only after declaring financial details

2018-01-04

KATHMANDU, Jan 1: The Securities Board of Nepal (SEBON) has directed the sides concerned to provide information about their financial status before issuing their initial public offering (IPO) so that the people can make informed decision.

SEBON's this directive comes at a time when the hydropower companies are preparing to issue their IPOs. Sixteen various hydropower companies are set to issue IPOs, it is stated. The trend of even the hydropower companies which are not financially sound issuing their IPOs has increased by keeping the people in the dark.

The Board has instructed these companies to give information regarding the duration the investments made in the projects will start giving returns and the bases for the same. It has asked the hydropower companies to provide clear information regarding the per megawatt cost of the hydropower project, the remaining term of the power production license and the period the investment would be refunded.

Board manager Niraj Giri said that the hydropower companies have been asked to disclose information on net assets per share and the per share income as per their audited financial statement. The companies which are into operation for three years have to give the details for the three years period while those companies not completing three years operation to provide details of the period they have been in operation.

The hydropower companies have started issuing IPOs after the government made it mandatory for them to provide 10 percent shares to the project affected locals and 15 percent shares to the general public. The Board has also urged the hydropower companies to give clear information about their audit reports.

The Independent Power Producers' Association of Nepal (IPPAN) has welcomed the Board's new provisions. IPPAN president Shailendra Guragain said the Board has reinforced the responsibility of the hydropower companies to clearly provide information about their financial status to the citizens before issuing IPOs.

Out of the 17 hydropower companies that are registered with the Nepal Stock Exchange Limited, only a few are in profit, according to the first quarterly report which was made public recently.

The Board has stated that it has made this provision to make the IPO issuance process systematized, transparent and simple.